Ukraine Monetary Policy January 2019


Ukraine: Central Bank holds the key policy rate stable in March

March 14, 2019

At its 14 March meeting, the National Bank of Ukraine (NBU) held the key policy rate stable at 18.00%, leaving it at a near three-year high. The decision marked the fifth consecutive meeting where the policy stance remained unchanged and was in line with the expectations of market analysts.

The Bank’s decision came against the backdrop of gradually receding inflationary pressures at the beginning of 2019—in line with the Bank’s early-year predictions—and ahead of the unpredictable presidential election scheduled for 31 March. Inflation moderated from 9.2% in January to 8.8% in February, the lowest reading in over two years. As a result, it edged closer to the Central Bank’s 6.5% plus or minus 2.0 percentage points target range.

In its communiqué, the NBU emphasized its tight monetary policy stance as the main underlying reason for easing inflationary pressures and for gradually improving inflation expectations, which were also supported by the strengthening hryvnia. Furthermore, the NBU sees inflation decelerating to 6.3% by the end of this year and confirmed its key monetary policy objective of reducing inflation to the 5.0% plus or minus 2.0 percentage points target range by the end of 2020.

Looking forward, monetary policy easing could well be underway later this year; “the NBU Board said that it could cut [the rate] in the future”, provided inflation expectations continue to improve and the risks to the inflation outlook stemming from uncertainty surrounding the presidential and parliamentary elections retreat.

The next monetary policy meeting is scheduled for 25 April.

Ukraine Interest Rate Forecast

FocusEconomics Consensus Forecast panelists see the key policy rate ending 2019 at 15.80%. For 2020, the panel expects the key policy rate to fall to 12.85% by year-end.

Author:, Research Team Manager

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Ukraine Monetary Policy Chart

Ukraine Monetary Policy March 2019 0

Note: NBU key policy rate in %.
Source: National Bank of Ukraine (NBU).

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